Changing face of additional performance measures in UK

In order to be awarded CPD units you must answer the following five random questions correctly. If you fail the test, please re-read the article before attempting the questions again.

  1. It is common practice for entities to present additional performance measures (APMs); these alternative profit figures can appear in various communications including company media releases and analyst briefings. Which of the following performance measures would not be considered an APM?

  2. Alternative profit calculations normally exclude particular income and expense items from the profit figure reported in the financial statements. Which of the following items would not normally be excluded when calculating an APM?

  3. APM’s can help enhance users understanding of the company’s results and can be important in assisting users in making investment decisions, as they allow them to gain a better understanding of an entity’s financial statements. However, they can be misleading. Which of the following is not thought to be a reason for an APM being misleading?

  4. The APM’s are often described in terms, which are neither defined by issuers nor included in professional literature. APM’s have however been defined in general terms. Which of the following would not be described as an APM?

  5. How has the IASB started to look at some possible ways to address the issues arising from the use of APMs?

  6. The IASB Disclosure Initiative Project is made up of a number of projects, both short term and medium term. The project will consider various aspects of disclosure. Which of the following disclosures and issues is not included in the Project?

  7. A consultation on 'Guidelines on Alternative Performance Measures’ has been recently launched with the aim of improving the transparency and comparability of financial information, whilst reducing information asymmetry among the users of financial statements. Which regulatory body has issued this consultation document?

  8. ESMA has t developed draft guidelines that address the concept and description of APMs, guidance for the presentation of APMs and consistency in using APMs. Which of the following is not one of the main requirements of these guidelines?

  9. ESMA’s guidelines regarding APMs may not be practicable when the cost of providing this information outweighs the benefit obtained or the information provided may not be useful to users. Issuers will most likely incur both implementation costs and ongoing costs. Why does ESMA feel that the costs of compliance with the guidelines will not be significant?

  10. ESMA is of the view that the application of these guidelines will improve corporate reporting. Which of the following improvements was not cited by ESMA as being the result of compliance with the draft guidelines?